Facebook employees hoping to cash out some stock options received an unpleasant early Christmas present this week, courtesy of the economic downturn.

In August, Facebook began considering ways to let current employees unload a portion of their shares that had vested by this fall.

Facebook CEO Mark Zuckerberg

But on Thursday, Facebook Chief Executive Mark Zuckerberg notified employees that the plan was on hold. "I'm writing this note to let you know some bad news," he wrote, according to an excerpt posted on Valleywag.com. "Despite a lot of work, we have not been able to finalize a plan for the employee stock sale we announced in August."

That indefinite postponement comes during a punishing downturn for publicly-traded technology companies and increasing layoffs in Silicon Valley. Google has fallen in value from its 2007 high by roughly 62 percent, closing at $274.32 on Thursday. Apple has dropped by around 55 percent, closing at $91.41, and eBay's fall is about 67 percent.

It's not uncommon for pre-IPO employees to gripe about not being able to cash out, but it is unusual for employers to arrange a partial payday in the way that Zuckerberg envisioned.

It must have seemed like a good idea this summer, especially when memories of a $15 billion valuation still seemed plausible. And the horrible market for IPOs--there were just six in the first three quarters of 2008, the lowest volume since 1977, according to Thomson Reuters and the National Venture Capital Association--must have discouraged that exit path.

But now that the company's valuation has collapsed at least as quickly as the NASDAQ, Facebook has been left with little choice but to close the shutters, hope for the best, and attempt to ride out the storm.

About the author

Declan McCullagh is the chief political correspondent for CNET. You can e-mail him or follow him on Twitter as declanm. Declan previously was a reporter for Time and the Washington bureau chief for Wired and wrote the Taking Liberties section and Other People's Money column for CBS News' Web site.
See full bio